Coin-Op Industry Trends: What’s In the Forecast? (Part 1)

CLA exec offers projections during Clean Show confab

CHICAGO - Where does the coin laundry industry stand, and what path will it take in the months and years to come?

Brian Wallace, president and CEO of the Coin Laundry Association (CLA), presented his organization’s insights and projections during a Clean Show educational session titled Current Trends in Laundry: 2013.

While many in the industry were impacted by the economic recession a few years ago, many owners felt a sense of overall confidence and security in the “recession-resistant” coin laundry industry, he says. “I think people came away with a renewed confidence, a confidence that [they’re] in the right business.”

And as the overall state of the nation’s economy and consumer confidence rebounded, so did the industry, according to Wallace.

One encompassing indication of confidence Wallace highlights is that there are “more new stores going in … especially compared to the 2009-2010 period.”

“Things are happening again,” he says. “People are making that investment in the business.”

DOUBLING DOWN

One such way store owners are investing more into their businesses is through the acquisition of multiple locations, Wallace observes. Many store owners have taken advantage of the down economy, purchasing property at relatively low prices.

“There’s been this window of opportunity where people have been able to pick up additional stores (and) make additional investments at prices that are still a bit depressed,” says Wallace. “While we still don’t have national chains or franchises, I think we’ve seen a significant increase in the number of multiple-store owners.”

He calls this tactic a “consolidation from within,” which all goes back to the overall narrative of confidence felt by many in the industry. “Many (store owners) came back to me and said, ‘The best opportunity is right under my nose. It’s the laundry business; it’s the business that I’m already in.’ What I’m seeing is this doubling down on the laundry business. To me, that spells confidence.”

RISE IN REHABS, RE-EQUIPS

Another trend, in relation to store owners acquiring multiple locations, is a rise in rehabs and re-equips. According to Wallace, many store owners are turning to Laundromats that are “run down, poorly equipped (and) poorly managed” in their plans for multiple-store ownership.

“What I’m seeing is (store owners) that are able to look at these diamonds in the rough and saying, ‘Is there an opportunity there?’” he says. “What I’ve seen happen amongst (coin laundry owners), especially some … with experience in the business, (is that they) have been able to determine which of those underperforming locations have the potential to do more business with re-equipping.”

In some of these acquisitions, he says, not only are store owners able to turn a failing Laundromat around, they are also able to increase the size of the facility in various aspects.

“Part of the narrative that’s made these successful endeavors is that upon re-equipping, it’s not just going from machines that don’t work to machines that do work, it’s going to the huge utility improvements. Many (store owners) that have taken this tact have been able to, essentially, build a bigger Laundromat within the same four walls (through) using bigger-capacity equipment.”

Indications of industry confidence are being shown not only by store owners but by manufacturers as well, according to Wallace.

“It’s not cheap to do what they’re doing. They’re spending … tens of millions of dollars, not only in the (research and development) and the innovation and improving, but retooling to manufacture (equipment).

“If anything else, it’s a sign of a stronger industry, at least in the expectation that the industry will continue to grow and improve, and I think that is a good opportunity for everybody.”

LARGER CAPACITIES

The trend of owners equipping their stores with larger-capacity machines (50 pounds and larger) coincides with what coin laundry customers are looking for, according to Wallace.

“Customers are looking for the larger-capacity equipment. You are getting the highest vend prices … out of those machines, and you ought to have the lowest cost of operation out of those larger machines, so it’s sort of a win-win situation.”

Larger-capacity machines not only benefit the store in terms of efficiency but provide a convenience factor for customers. Wallace encourages store owners to use this as their main selling point to distinguish themselves from competitors.

“How are you going to distinguish yourself, not just from the Laundromat down the street, but from all the other different ways that people do laundry? … That’s where this larger equipment comes into play.

“What we have to offer is time savings and convenience, and shame on us if we don’t drive that home in our marketing and have our stores set up that way.”